How Our Choices Influence The 2015. 2. 7.آ  The best practices and pro tips that promised success...

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Transcript of How Our Choices Influence The 2015. 2. 7.آ  The best practices and pro tips that promised success...

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    How Our Choices Influence The Future Kevin Hillstrom

    President, MineThatData

    Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 2

    1995: Catalogs On Top Of The World

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 3

    E-Commerce At Eddie Bauer: 1996

    1996: Eddie Bauer

    Billion Dollar Business

    Thriving Stores

    Thriving Catalog

    $1,000,000 Annual E-Commerce Volume

    Derision from Marketing Leadership … “Did you get six or seven orders today? Six? You missed forecast by 14%, let’s try to do better.”

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 4

    2001: The Worst Advice We Ever Got

    We chose to believe that customers who bought from multiple channels spent more. We chose wrong. If the thesis were true, then all of our businesses would have grown exponentially. The query failed us, because the query was highly biased.

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 5

    Then We Botched Our Matchback Logic

    The multi-channel query led catalogers and vendors to create matchbacks … matchbacks grossly overstated catalog effectiveness.

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 6

    Overstated Demand = Overmailing Customers

    Matchbacks tell us that $2.50 per book or $2.00 per book works!! Reality (mail/holdouts) show us we are actually losing profit. The lost profit opportunity means we cannot invest for growth elsewhere.

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 7

    2000 – 2005 = Short-Term Choices, Long-Term ?

    We chose multichannel tactics over earned business growth.

    We chose co-ops over list organizations.

    We chose to use the website as an order form and not as a demand generation channel.

    We chose to listen to vendors, researchers, trade journalists, and consultants, when we should have listened to our customers and our merchandise assortment.

    We chose to market to our core customer base when we should have chosen to grow via customer acquisition.

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 8

    2005 – 2010: Outsiders Flee Catalogers

    Catalog Age Becomes Multichannel Merchant.

    Walter Karl, Edith Roman, Rubin Response, Millard, Mokrynski-Direct, American Church Lists, Jami, Direct Media all folded into infoGroup / InfoUSA – the utter collapse of an industry – and the beginning of a dramatic brain drain in the catalog industry.

    The final Catalog Conference was held in New Orleans in 2009.

    Co-Ops dominate prospecting efforts for catalogers, at a time when online marketers learned how to use online marketing to acquire customers. The reliance on co-ops results in an acceleration of a customer demographic feedback look, a feedback loop that greatly spills over into customer merchandise preferences.

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 9

    2005 - 2010: The Feedback Loop Accelerates

    The feedback loop is this:

    1. We get cheap names from the co- ops.

    2. Co-ops model “success” … the names buying are 55+, they like merchandise Baby Boomers like.

    3. Amazon doesn’t contribute names, causing the co-op pool of names to age.

    4. Aged co-op names prefer Baby Boomer merch – causing catalogers to alter their merchandise assortment.

    Recent Co- Op Names

    From Matchbacks

    Catalog Marketing,

    Online Support

    Merchandise Loved By 62

    Year Olds

    Read Catalog, Buy

    Online

    Matchbacks Show

    Catalogs Work

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 10

    2010 – 2015: Stuck In The Feedback Loop

    Catalogers are now locked-in to the feedback loop.

    The “best practices” and “pro tips” that promised success in 2005 led to major problems in 2015. We chose a path – now we have to deal with the consequences.

    Countless “multi-channel” and current day “omnichannel” businesses failed after adhering to industry-leading advice.

    Recent Co- Op Names

    From Matchbacks

    Catalog Marketing,

    Online Support

    Merchandise Loved By 62

    Year Olds

    Read Catalog, Buy

    Online

    Matchbacks Show

    Catalogs Work

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 11

    The Experts Are Wrong … Often … Me Included!

    Compare 2006 to 2014

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 12

    Coldwater Creek – A 2006 Success Story

    “Coldwater Creek is an example of company that has benefited greatly from going public. The women’s apparel retailer blossomed from $116 million in sales in 1996 to $1.1 billion in 2006. Interestingly enough, much of Coldwater Creek’s growth can be attributed to the capital it raised through its IPO and its decision to move to become a multichannel merchant. Coldwater was able to transform itself from the once solely catalog based merchant into a much more quickly growing multichannel merchant with storefront locations and a successful online store. The company experienced a 33% increase in internet net sales in fiscal 2006. With internet sales steadily increasing and catalog sales decreasing over the past five years, Coldwater Creek has launched several successful marketing campaigns to bolster internet sales. Coldwater’s user friendly, attractive, and constantly updated website has allowed for the company to continue its growth via the internet. Coldwater Creek’s transformation demonstrates one company’s successful IPO and willingness to adjust to an evolving market, moving beyond a traditional direct mail cataloger to embrace the power of e-commerce.” http://www.tullyandholland.com/t-h-publications-page/items/changing-times-for-direct-marketers.html

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 13

    Coldwater Creek – 2014 = Bankrupt

    “Coldwater Creek’s bankruptcy is not a harbinger of anything, nor is it a one-off. There are more reasons for a specialty retailer to fail than there are to succeed: inability to keep up with the fast-changing fashion scene, poor locations, weather, a lousy website and, of course, very stiff competition. Coldwater Creek is just another victim of what was once a successful business model that management didn’t move fast enough to change. That story will repeat itself several more times in the months and years ahead.”

    http://247wallst.com/retail/2014/04/12/coldwater-creek-bankruptcy-is-not-a-canary- in-the-coal-mine/

    Turns out that the experts were not right about Coldwater Creek. The very dynamics that seemed to guarantee success sunk the business.

    http://247wallst.com/retail/2014/04/12/coldwater-creek-bankruptcy-is-not-a-canary-in-the-coal-mine/ http://247wallst.com/retail/2014/04/12/coldwater-creek-bankruptcy-is-not-a-canary-in-the-coal-mine/

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 14

    If Multichannel Worked, Then ……………….. ???

    Orchard Brands Loehmann’s Blockbuster Linens’ n Things Oriental Trading Company Mervyns Coldwater Creek Alco Stores Love Culture G.I. Joes Bombay Co. Delia’s The Sharper Image Brookstone Red Envelope Dots LLC Harry and David Gottschalks Burpee Holding Co. Deb Shops Foster & Gallagher Silver Jeans Borders Betsey Johnson Circuit City Filene’s Basement Radio Shack SkyMall Eddie Bauer

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 15

    Why Doesn’t This Stuff Work?

    We Misunderstand The Interaction Between Merchandise And Demographics.

  • Kevin Hillstrom, President, MineThatData http://blog.minethatdata.com

    kevinh@minethatdata.com 16

    A Quote From A Former Co-Op Executive

    “We are essentially recycling the same 10,000,000 customers who purchase from catalogers 0-3 every three months. These customers are generally age 55 and older, and they prefer to purchase over the telephone or via online catalog matchback. That’s what we do.”

    A Quote From A Catalog Executive

    “I run a nine figure business. That’s a big business. I asked my primary co-op to calculate the percentage of names they gave me that purchased from my product category in the past year. It was 45%. How is that possible? And when I queried my co-op about the low percentage, they told me they were finding names that had affinity to my product line. Some affinity. I spend more than a million dollars with them, and lose $.”

  • Kevin Hillstrom, President, MineThatData http://blog.